Rough start to 2012 as January tech M&A spending drops 70%

Contact: Brenon Daly

As the new year starts, tech acquirers have yet to really reach deep to do any deals. In January, aggregate spending on all tech transactions across the globe plummeted to just $3.5bn – the lowest monthly level since the bottom of the recession in February 2009. Compared to the January 2011 total of $11.8bn, the value of deals announced in the just-completed month fell by a whopping 70%. The number of transactions, however, was unchanged, year-over-year, at roughly 325.

A key point to make about deal flow in the just-completed month is that not a single transaction topped a half-billion dollars. In fact, the largest deal in January 2012 (Semtech’s all-cash $494m reach for semiconductor vendor Gennum) would only be the sixth-largest transaction of January 2011. Last year, January featured deals including Qualcomm’s $3.6bn purchase of Atheros Communications – which, at the time, stood as the largest chip transaction in four years – as well as Verizon’s big bet on cloud services with its $1.4bn acquisition of Terremark Worldwide.

The January totals extend a slump that has seen M&A spending sink dramatically below average in four of the past five months. Since peaking at a post-recession monthly record of $40.2bn last August, spending levels have plunged to $8.9bn in September, $14bn in October, just $4.3bn in November and $19.7bn in December.